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Civil Case Judgment

The Higher People's Court of Shanghai

l995-Hu-Gac-Mi-Zhong-(Zhi)-Zi-43

Defendant-Appellant:

Shanghai Duoyunxuan

Address: 422 Nanjingdong Road, Shanghai

Legal Representative: Zhu Junho, general manager

Authorized Attorneys: Dai Xiaojing, employee of Shanghai Duoyunxuan

Tao Wuping, attorney-at-law of Shen-da Law Firm

Plaintiff-Appellee:

Wu Guanzhong, male, born in July 1919, professor at the National Institute of Arts and Crafts, home 'address at 34 Dongsan-huanzhong Road, Caoyang District9 Beijing.

Authorized Attorneys: Shen Zhigeng, attorney-at-law of Zongheng Law Firm, Beijing

Liu Sanhong, attorney-at-law of Tianren Law Firm, Shanghai

Defendant-appellee:

Hong Kong Yongcheng Antiques Auction Company Ltd.

Address: 273-C Queen's Road Central, basement of Xili Building, Hong Kong

Responsible Person: Huang Hao,

Authorized Attorney: Wang Yinslieng1 attorney-at-law of Shi fang Law Finn, Shanghai

Appellant Shanghai Duoyunxuan, refusing to accept as final the judgment of the Second Intermediate People's Court of Shanghai for a dispute over copyright infringement, which is filed as 1994-Hu-Zhong-Min-( Zhi) -Chu-109, has made an appeal to this Court. Pursuant to relevant laws this Court has formed a collegial panel and held a public hearing of the case. Zhu Junho, the legal representative of appellant Shanghai Duoyunxuan, Dai.Xiaojing and Tao Wupingy the authorized attorneys of Shanghai Duoyunxuan, Shen Zhi-geng and Liu Sanhong, the authorized attorneys of appellee Wu Guanzhong, and Wang Yinsheng, the authorized attorney of appellee Hong Kong Yongcheng Antiques Auction Ltd. of Hong Kong, appeared at the trial for argument. The hearing of the case has now come to a close.

The Trial court found, after investigation, that defendants Shanghai Duoyunxuan and Hong Kong Yongcheng Antiques Auction Ltd. reached an agreement for a joint auction of modem Chinese paintings and calligraphic works in Hong Kong in the fall of 1993. In the Picture Catalog printed for the purpose of this auction was a piece of painting, numbered 231, Portrait of Mao zedong, which had a signature of Wu Guanzhong and the words "Bombarding the Headquarters". When Wu Guanzhong learned of the auction and found that the painting was a counterfeit with his name forged on it, he authorized another person to try to stop the auction of the paint-mg. The two defendants held that the painting in question could not have been counterfeited. On October 27 of the same year, the auction was held by the two defendants jointly as planned, and the painting in question was sold at the price of HK $ 528,000.

The trial court held that defendants Shanghai Duoyunxuan and Hong Kong Yongcheng Antiques Auction Ltd. insisted on jointly auctioning Portrait of Mao Zedong which had a forged signature of Wu Guatirhong,. in spite of efforts of others to dissuade them from doing so, and thus violated relevant provisions in the copyright law of this country. What they did jointly constituted a gross infringement upon the copyright of Wu Guanzhong and brought about material damage as well as mental sufferings to the plaintiff, and they should be held jointly and severally liable for the consequences of their acts, and be enjoined to refrain from further infringements, to eliminate the negative effects of their infringing acts, to make a public apology and to pay damages. Pursuant to relevant provisions of General Principles of Civil Law of the People' s Republic of China and the Copyright Law of the People' s Republic of China, the trial court decided as follows: 1) Defendants Shanghai Dnoyunxuan and Hong Kong Yongcheng Antiques Auction Company Ltd., in jointly auctioning a piece of fine art Portrait of Mao zedong which carries a forged Signature of Wu Guanzhong, jointly committed a gross infringement upon the copyright of Wu Guanzhong, and they should be enjoined from further infringements; 2) Both defendants should make a public apology in the People's Daily (Overseas Edition) and Guangming Daily, and the contents of such an apology should be examined and approved by the (trial) court. 3) The defendants should pay jointly to plaintiff damages in the amount of RMB 73, 000. The cost of the case at the trial level should be borne jointly by defendants Shanghai Duoyunxuan and Hong Kong Yongcheng Antiques Auction Ltd.

The appellant petitions to this Court to reverse the judgment of the trial court and make a new judgment. The petition is based on the following facts and reasons: The trial court erred both in its findings of fact and in its application of law; the applicable law for this case should not be the law at the place of one of the defendants; it should be the law at the place of the auction, i.e., the law of Hong Kong; and the trial court was not fair with respect to its decision that Shanghai Duoyunxuan and Hong Kong Yongcheng should have the same liabilities.

Appellee Wu Guanzhong holds in his response to the appeal that the findings of the trial court as well as its 'application of law were correct, so he petitions to this Court to uphold the judgment of the trial court and dismiss the petition of the appellant.

Appellee Hong Kong Yongcheng Antiques Auction Ltd. failed to respond to this appeal in writing within the period prescribed by law, but alleges at the hearing of this Court, that Shanghai Duoyunxuan forwarded to it the opinions of relevant parties and of the artist with respect to the painting in question, and that it made the decision to go ahead with the auction after consulting with the consignor of the painting and after obtaining an opinion from experts on the painting, and the decision, being made after much deliberation, is legally valid. It also holds that the question at issue is not the authenticity of the signature. Rather it is the authenticity of the painting. The auction took place in Hong Kong and the principles guiding all relevant acts should be based on Hong Kong law.

This court has found, after investigation, that defendants Shanghai Duoyunxuan and Hong Kong Yongcheng Antiques Auction Company Ltd. ( hereinafter referred to as " Hong Kong Yongcheng") reached an agreement in December, 1992, in which they agreed to have a joint auction of modem Chinese paintings and calligraphic works in Hong Kong in March (spring) and September (fall.) of t993 They also agreed on matters regarding the selection of pieces to be auctioned, and the method of profit sharing. On July 27, 1993, Shanghai Duoyunxuan, in accordance with the agreement, air transported the pieces it selected to Hong Kong, and sent its personnel to Hong Kong to help appraise, select, and fix the minimum prices of the pieces which Hong Kong Yongcheng collected overseas.

On October 2 of the same year, a client by the name of Zhao, a Hong Kong resident, entered into a consignment-for-sale agreement with Hong Kong Yongcheng, under which Zhao authorized Hong Kong Yongcheng to auction the painting "Portrait of Mao zedong" with the signature of Wu Guanzhong and the words "Bombarding the Headquarters". The price was estimated to be between HK $ 300,000 and 350, 000, and in the column for notes it was stated, among other things, that the date for the auction was to be on October 27, 1993. The parties also specifically agreed on matters regarding the commission charges and insurance, etc.. Early in October of the same year, Hong Kong Yongcheng had a Picture Catalogue printed of the 382 pieces of painting and calligraphic works which were collected by it or provided by Shanghai . Duoyunxuan. On the cover of this Picture Catalogue it was stated that Hong Kong Yongcheng Antiques Auction Ltd. and Shanghai Duoyunxuan would jointly hold an auction of modern Chinese paintings and calligraphic works and ancient paintings on October 27. 1993 (Wednesday) at 2 30 PM. Picture 231 in this Picture Catalogue was a painting Portrait of Mao Zedong with a signature of Wu Gudnzhong. On its upper right corner were words written vertically in a runing hand "Bombarding the Headquarters-a Big Character Poster of Mine, Mao Zedong" and on the lower left corner were words, also written vertically and in a running hand, "painted by Wu Guanzhong in 1962 at the Institute of Arts and Crafts." The painting was 38 cm by 66 cm. The appraised price was HK $ 300,000-350,000. Hong Kong Yongcheng, in distributing the picture catalogue, also gave Shanghai Duoyunxuan 50 copies of it. Shortly before the date for the auction, Shanghai Duoyunxuan gave the copies to relevant institutions and individuals.

In mid-October of the same year, Wu Guanzhong learned of the matter and held that Portrait of Mao Zedong was something he never painted and the date 1962 on it was even more absurd. There-upon, . he authorized another person to report the matter to relevant departments, trying to stop the auction of this painting. On October 25, 1993, the Administrative Office of Cultural Affairs of Shanghai Municipality, in document 95-Hu-Wen-She-Zi( 93), notified Shanghai Duoyunxuan that "if the above mentioned paintings are indeed counterfeits, they must be withdrawn immediately from the auction. Other counterfeits, if there are any, should also be handled in the same way and the results of the verifying work should be reported to this Office". Shanghai Duoyunxuan responded to the notification as follows: The painting in question was consigned to Hong Kong Yongcheng for sale at the auction. in Hong Kong; The auction was to be held in Hong Kong and presided over by a Hong Kong legal person, and only Hong Kong Yongcheng had the power to decide; and Shanghai Duoyunxuan promised to forward the opinion of the administrative office and the request of the artist, and to try its best to persuade Hong Kong Yongchaig into withdrawing the piece in question. Subsequently, the telecommunication Shanghai Duoyunxuan told the inspecting team it sent to the H9ng Kong auction to inform Hong Kong Yongcheng of the opinion of the acirninistrative office and the request of the artist. At the same time Shanghai Duoyunxuan also did some verification wit. respect to the piece of work in question. After receiving the notice and opinion forwarded by Shanghai Duoyunxuan, Hong. Kong Yongcheng immediately invited relevant experts to verify the piece of work in question, and these experts held that the artist's accusation of counter-feisance and forgery were groundless after they made close analysis of the various aspects of the work, including its style. At the same time they also confirmed that the painting was created in 1966 instead of 1962. Hong Kong Yongcheng also summoned the consignor, from whom it learned about the circumstances under which Portrait of Mao Zedong was purchased and obtained a guarantee from him. Hong Kong Yongcheng also provided a certificate stating that "the consignment, advertising and bidding with respect to the said piece should all be dealt with by this company in accordance with its rules, and they have nothing to do with Shanghai Duoyunxuan……This company is of the opinion that, according to the laws of Hong Kong and the rules of auction of this company, we have the power to decide to go ahead with the auction". Late in October of 1993, experts from Shanghai Duoyunxuan went to Hong Kong to work for the auction. On the afternoon of October 27, the auctibn of modern Chinese paintings and calligraphic works and ancient paintings jointly organized by Shanghai Duoyunxuan and Hong Kong Yongcheng Antiques Auction Ltd. was held as planned in Haicheng Restaurant, Kowloon. The painting Portrait of Mao Zedong, numbered 231, was sold at the price of HK $ 528, 000, of which, HK $ 48, 000 went to the auctioneer as commission.

On June 5, 1994, at the request of Wu Guanzhoflg' s employer the National Institute of Arts and Crafts, the Ministry of Public Security of the People' 5 Republic of China, in its Forensics Report, gave its opinion on the authenticity of the signature on Portrait of Mao Zedong in the Picture Catalogue, stating that the words "painted by Wu Guanzhong in 1966 at the Institute of Arts and Crafts" on the painting Portrait of Mao Zedong, which was listed as lot 231 in the Picture Catalogue of the auction held by Shanghai Duoyunxuan and Hong Kong Yongcheng Anuques Auction Ltd and which has been submitted to us for examination, are not by the hand of Wu Guanzhong;" On July 16; 1994, Wu Guanzhong instituted this action with the Intermediate People' S Court of Shanghai, alleging that Shanghai Duoyunxuan and Hong Kong Yongcheng infringed upon his copyright

In the course of hearing the case, this Court invited researcher Zhan Chncai from the Second Research Institute of the Ministry of Public Security to attend the hearing as a witness, and provide explanations with respect to relevant questions in the forensics report.

This Court is of the opinion that the right of citizens to affix their names to their works is protected: by the law, which also prohibits creating and selling paintings with forged signatures. Based on the evidence available, we find that the painting in question, Portrait of Mao Zedong, was not 'signed by the hand of Wu Guanzhong. It is a painting with a forged signature of Wu Guanzhong. Shanghai Duoyunxuan and Hong Kong Yongcheng, in auctioning the painting with a forged signature of Wu Guanzhong according to their joint-auction agreement, jointly infringed upon the copyright of Wu Guanzhong. Shanghai Duoyunxuan, one of the infringers, is in Mainland China Several activities in connection with the auction, such as paintings and calligraphic works, editing and printing the Picture Catalogue, and settling the accounts, took place in Shanghai Copies of the Picture Catalogue containing the painting in question were also distributed in Shanghai. Therefore Shanghai is one of the places of the tort. On account of this, the application of the law of the People's Republic of China is correct. The contention of Shanghai Duoyunxuan and Hong Kong Yongcheng that for this case the applicable law should be Hong Kong law is without merit. Shanghai Duoyunxuan and Hong Kong Yongcheng, in spite of efforts at dissuading them, persisted in auctioning the painting. What they did constitutes a gross infringement. They shall be held liable wider relevant provisions of the Copyright Law of the People's Republic of China and other relevant laws and be enjoined to refrain from further infringements, to make a public apology , to eliminate the negative effects of their in-fringing acts, and to pay damages. The findings of facts as welt as the application of law of the trial court are both correct However, due to the fact that the painting in question was directly commissioned to Hong Kong Yongtheng, and that Shanghai Duoyunxuan forwarded the opinions of the relevant departments and of the artist on several occasions, we hold that Hong Kong Yopgcheng shall be held chiefly liable, and Shanghai. Duoyunxuaa, as a cc-sponsor of the auction, shall be partly liable, and the two defendants shall be jointly and severally liable for each other. Pursuant to Clause 7 of Article 46 of the Copyright Law of the People' s Republic of China, Clauses 1, 7, 9, and 10 of Article 134 of General Principles of Civil Law of the People 's Republic of China, and Clause 1 of Article 153 of Civil Procedure Law of People' s Republic of China, we hereby decide as follows:

1. The decision in Paragraph 1 of the 1994-Hu-Zhong-Min-(Zhi)-Chu-109 judgment of the Second Intermediate People's Court of Shanghai is upheld. Defendants Shanghai Duoyunxuan and Hong Kong Yongcheng Antiques Auction Ltd., in jointly auctioning a piece of fine art Portrait of Mao Zedong which carried a forged signature of Wu Guanzhong, jointly committed a gross infringement upon the copyright of Wu Guanzhong, and they shall be enjoined from further infringements;

2. The decision in Paragraph 2 of the 1994-Hu-Zhong-Min (Zhi)-Chu-Zi-109 judgment of the Second Intermediate People' 5 Court of Shanghai is upheld. Both defendants shall make a public apology in the People' 5 Daily (Overseas Edition) and Guangming Daily, and the contents of the apology shall be examined and ap-proved by this Court.

3. The decision in Paragraph 3 of the 1994-Hu-Zhong-Min-(Zhi )-Chu-Zi-109 judgment of the Second Intermediate People' 5 Court of Shanghai is changed from "The defendants shall pay jointly to plaintiff damages in the amount of RMB73, 000" into "Shanghai Duoyunxuan and Hong Kong Yongchen'g Antiques Auction Ltd. of Hong Kong shall pay jointly to Wu Guanzhong damages in the amount of RMB73, 000, of which 27,000 shall he paid by Shanghai Duoyunxuan and 46, 000 shall be paid by Hong Kong Yongcheng Antiques Auction Ltd.".

The cost of this case at the trial and appellate levels is RMB 5,400, of which Shanghai Duoyunxuan shall pay 2,000 and Hong Yongcheng shall pay 3,400.

This judgment is final.

Presiding jtidgt: Lu Guoqiang

Acting Judge: Chen Zilong

Acting judge: Deng Sicong

Date: March 11, 1996

Court Clerk: Ma Hong

seminar@attorney.net.cn

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